Cautious market sentiments remained in Q1 2025

• In Q1 2025, demand remained relatively steady. Net absorption reached 89,000 sqm, slightly exceeding the corresponding period of 2024. 3PL firms continued to contribute to leasing activities. For example, Jiading saw c. 10,000 sqm of leases from 3PL operators.
• The vacancy rate continued to rise in Q1 2025, reaching 28.0%, as major projects continued to enter the market. Tenants remained cautious regarding expansion activities, resulting in slow absorption progress for many new projects.

Three major projects reached completion in Q1 2025

• Overall supply continued to increase in Q1 2025, pushing total non-bonded stock level to over 10 million sqm. Three projects totalling 442,100 sqm reached completion in the quarter, with Songjiang, Qingpu and Jinshan all recording new projects entering the market.
• The quarter’s supply is primarily located in the west Shanghai submarkets; however, the allocation is expected to extend to other submarkets this year. For instance, Fengxian Lingang, Jiading, and Northwest are all expected to see new completions.

Rents continue to trend down amid project influx

• Overall rents decreased by 3.7% q-o-q on a like-for-like basis to RMB 1.35 per sqm per day, reflecting a 10.6% y-o-y decline. The continued supply influx and elevated vacancy level have prompt aggressive pricing strategies from landlords in the market.
• No major transactions were recorded in Shanghai logistics market this quarter. Investors remained cautious in investment decisions due to declining rents and elevated supply.

Outlook: Market remained under pressure in the short term

• Despite a moderation in supply compared to the record-setting levels of 2024, the absolute supply level remains substantial. As a result, vacancy rates are expected to remain elevated in the short-term.
• Competition among landlords is expected to persist, with de-stocking remaining the primary focus in 2025. In the near future, rents are projected to keep trending downwards.